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Free trade and chemical engineers.

Free Trade and Chemical Engineers This speech was given at the spring seminar of the American Institute of Chemical Engineers in Houston, Texas on April 3,1989.

Our CSChE has a proud history of collaboration with the AIChE and we remember with great pleasure the joint meetings between our organizations in 1958 and 1973 as well as the tripartite conference in Montreal in 1968 held jointly by the AIChE, British Institution of Chemical Engineering and the CSChE. Many distinguished American chemical engineers such as T.K. Sherwood, J.G. Knudsen, A.B. Metzner and T.W. Fraser Russell received some of their education from Canadian schools. An even larger number of our chemical engineers in Canada have American training. Indeed, it seems as if free trade in chemical engineering brain power has been going on between our two countries for a great many years. But it is only this very last year that our politicians have managed to negotiate a free trade agreement in goods and services.

In Canada the political process leading up to the initialing of the bilateral Free Trade Agreement was strongly debated and a general election was vigorously fought over it as the main issue. My impression is that, in your recent elections, the FTA was not a big issue. Indeed, on visiting the USA last year it was difficult to find anyone who knew that a Free Trade Agreement was being negotiated. I guess that's what happens when a mouse plays with an elephant. When the mouse jumps, the elephant doesn't feel a thing. However, if the elephant jumps - God help the mouse. That's how a former prime minister once described Canada's business relationship with the USA, a mouse and an elephant.

In the past couple of years, business leaders in Canada were indeed becoming quite worried that the USA was going to shake us severely as the full weight of protectionist sentiment seemed to be building. Therefore, by and large the chemical industry and the professionals employed by those industries are very happy that the deal has been initialed and free trade is prevailing.

What is this Free Trade Agreement all about? The basis of the FTA is that our two countries are each other's largest trading partners. Total bilateral trade in goods and services was over $166-billion in 1988. Canada is America's fastest growing export market. From 1982 to 1987 US exports to the world grew by 17% but the US exports to Canada grew by 46%.

Other than Canada as a whole, Ontario is your biggest trading partner - bigger than Japan. Michigan is Canada's second largest trading partner second only to the entire US. The USA exports more to the nine million people of Ontario than the 200-million people of Britain, West Germany, Holland, France and Belgium. Two way trade between Canada and the US provides jobs for two million Canadians and two million Americans. North-south trade flows between western Canada and the western and central states, between southwestern Ontario, Michigan and the eastern states, between New York and Quebec, and between the Canadian Maritimes and New England. These free trade routes offer very, very exciting prospects.

For example, where my own company is situated in southwestern Ontario on the border, we will have unobstructed same day access to a huge North American market including 54% of the US payroll, 48% of its retail sales and 54% of its manufacturing activity. Our colleagues in Detroit will have same day access to 65% of Canadian economic activity and all the attendant manufacturing retailing, etc.

The above statistics emphasize the importance of the objectives of the FTA - namely accessability, security and driving force.

It is therefore, gratifying that our governments have negotiated a deal which will, step by step, eliminate tariffs. Since Canadian tariffs are currently higher than the American ones, Canada's loss will be $1.7-billion while the US foregoes $700-million.

Under free trade, our governments will not block investments across the border except for strategic reasons. Note that, in terms of foreign investment, both countries are about evenly matched at about $20-billion each.

Energy trade will amount to $10-billion and provide Canada a guaranteed market. About 150 services are covered in the deal which will especially improve and expedite the tourism industries.

If ever you have tried to move across the border to work or transfer people between company branches or tried to hire a consultant across the border, you will be happy with the FTA.

A feature of the agreement, which is quite unique and envied by other trading partners, is the dispute settlement which, we hope, will solve any family arguments.

There is a compelling logic to free trade. We know from the economists and our own experiences that countries and businesses alike do better when they trade and do worse when they run into barriers.

For example, it is revealing to compare job creation in Canadian industries that have protective tariffs and those that do not.

The chemical industry and every other industry has, over time, had a steady stream of jobs created and lost due to expansion, contractions, etc. But if you net out all the changes in the industries that have no tariffs or very low tariffs, all have a record of net job increases between 1974 and 1982. On the other hand, industries such as textiles, furniture, etc. have net job losses despite double digit tariffs designed to protect them.

The results of double digit tariffs are: protection for inefficient industries, contraction of efficient industries, higher costs to consumers in the protecting country, less choice to consumers, and job losses in efficient industries.

There is no escape, prosperity depends on trade and that places the emphasis on today's global market place.

In a recent article, Peter Drucker, the US management guru wrote that, "any national economy that wants to prosper will have to accept that it is the world economy that leads and that domestic economic policies will succeed only if they strengthen, or at least do not impair the countries' international position. A country, industry or company that puts job preservation ahead of international competitiveness will soon have neither production nor jobs." To be competitive on the international scene means that we face a constant challenge to renew our products, processes and practices. In other words, the skill, excellence and professionalism of our chemical engineering family is of much greater importance than ever before.

I believe that chemical engineers from Canada and the US, working in an environment that encourages free trade of goods and services, because of their professional excellence, will maintain the competitiveness of our chemical industries on this globe. I believe that free trade in North America is good for our profession and our profession is good for North American free trade.

What is more, I believe that our Canadian/US Free Trade Agreement will lead eventually to global free trade and, in such a world, our highly skilled chemical engineering profession will see to it that our chemical industry prospers beyond our dreams to ensure the prosperity of our members for many, many years to come.

Free trade works.
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Title Annotation:transcript of speech given at the spring seminar of the American Institute of Chemical Engineers in Houston, Texas on April 3, 1989
Author:Rhodes, Edward
Publication:Canadian Chemical News
Article Type:column
Date:Jun 1, 1989
Words:1188
Previous Article:Organic Synthesis, Vol. 66
Next Article:Houston welcomes chemical engineers.
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